CPC Shareholders Approve Pipeline Expansion To 67Mn Tons/Year

CPC Shareholders Approve Pipeline Expansion To 67Mn Tons/Year

Caspian Pipeline Consortium (CPC) shareholders on 16 December approved the long-proposed capacity expansion of the CPC oil pipeline during a gathering in Moscow of the CPC-R Board of Directors and CPC-K Extraordinary General Shareholders. Implementation of the plan to boost the 1,510km pipeline’s capacity to 67mn tons/year (1.34mn b/d) by 2014 is to begin this month.

Shareholder approval follows an announcement on 11 December 2009 that BP had sold its remaining interests in the consortium to LukArco. BP had opposed the expansion of the pipeline due to its involvement in the Baku-Tbilisi-Ceyhan (BTC) crude oil pipeline and chose to sell its shares in companies with stakes in the consortium (MEES, 21/28 December 2009). However, Russia, as the largest shareholder, had blocked expansion of the pipeline for years previously, insisting on changes in the consortium’s management structure, tariffs and debt repayment (MEES, 1 October 2007).

Opened in 2001 with a capacity of 28.2mn t/y (564,000 b/d), the CPC runs from Atyrau in Kazakhstan to Russia’s Black Sea port of Novorossysk. It was originally conceived as the main conveyor for crude produced at Tengizchevroil’s onshore Tengiz and Korolev oil fields, where production is averaging around 600,000 b/d. Since 2001, the CPC has become an export route for other Kazakh crudes and is used by Russian oil companies as well. The pipeline regularly exceeds its design capacity, with throughput averaging 700,000-800,000 b/d every month in recent years. Furthermore, the advent of large production volumes from Kazakhstan’s offshore Kashagan project as of 2013 warrants a large increase in the country’s export capacity and the existing CPC is seen as a key export route for Kashagan production.

The expansion project will involve the construction of 10 new pumping stations – eight in Russia, two in Kazakhstan – six new oil storage tanks at the loading terminal near Novorossysk, and a third single point mooring for the CPC marine terminal.

CPC shareholders include: Russian Federation – represented by Transneft (24%) and CPC Company (7%) for a total of 31%; and Kazakhstan – represented by KazMunaiGaz (19%) and Kazakhstan Pipeline Ventures (1.75%) for a total of 20.75%. Other shareholders include: Chevron Caspian Pipeline Consortium Company 15%; LukArco 12.5%; Mobil Caspian Pipeline Company 7.5%; Rosneft-Shell Caspian Ventures Limited 7.5%; BG Overseas Holding Limited 2%; Eni International NA NV 2%; and Oryx Caspian Pipeline 1.75%.

Copyright MEES 2010.